A comparative analysis of the relationship of nature of poverty with Zakat collection and real gross domestic product: an empirical study in the context of Malaysia

Abstract

This study aimed to analyze the comparative contribution of the collection of Zakat (Islamic integrated social finance) and Real Gross Domestic Product (RGDP) to the incidence /nature of poverty in the context of Malaysia by employing quantitative methodology. The data, time series, used in this study were collected from Economic Planning Unit – Prime Minister’s Department of Malaysia and Islamic Social Fiancé Report 2014, Ministry of Finance of Malaysia and various web-based sources for the period from year 1990 to year 2015. Correlation, regression, causality, Johansen cointegration, normality, autocorrelation LM, and hetereoskedasticy/homoskedasticity were used under data analysis and discussion. All the data collected were analyzed with the use of the statistical software called E-views 6.0. A multiple regression model was formulated so as to achieve the objective of the study. HCI (Head Count Index: the incidence/nature of poverty in Malaysia) was the dependent variable and the collection of Zakat and Real Gross Domestic Product were the independent variables. There was a significant relationship between the incidence/nature of poverty alleviation and the collection of Zaka in Malaysia. There was a negative associationship/relationship between the alleviation of poverty and the collection of Zakat. One percent of increment in the collection of Zakat led to decline the alleviation of poverty by 3.12 units in Malaysia and one percent of increment in the real growth rate in Malaysia led to decrease the nature of poverty/ alleviation of poverty by around 0.032. The policy makers and the government of Malaysia in terms of the annual growth rate of collection of Zakat and the real growth rate of GDP of the country could be appropriately directed to make aware of adopting the strategic macroeconomic management.